"The 418 bars that were closed this fiscal will not reopen. We are now looking into the legal aspect of closing down the remaining 312 bars. We have to seek legal opinion because we have already collected the annual license fee for this fiscal, and our aim is to see that these 312 bars are closed at the earliest," Chandy told reporters after a meeting of the Congress-led United Democratic Front (UDF).

"Starting from today, apart from the already declared dry days, henceforth all Sundays would be dry days," he said.

"From the next fiscal (2015-16), only five-star hotels will be serving liquor," he said.

Every year, 10 percent of the retail outlets that sell liquor would be closed. "In 10 years from now, Kerala will see prohibition in force," Chandy said.

While the state-owned Beverages Corporation is the sole wholesaler of liquor in the state, there are 383 retail outlets also belonging to the state.

"We will rehabilitate all those who lose their jobs (in bars). They will be given soft loans to start self-employment programmes," he said.

"From this fiscal, we will set aside five percent of the revenue generated from the sale of liquor to a separate fund that will take care of rehabilitation schemes and also for launching a massive anti-liquor campaign," Chandy said.

The meeting also decided that the government will make efforts to promote the traditional toddy industry.

The UDF arrived at the decisions following state Congress president V.M. Sudheeran's tough stand when he, citing a report by the Comptroller and Auditor General, argued that the 418 bars with poor infrastructure should not be given new licences this fiscal.

The issue reached the Kerala High Court which has asked the government to come up with a new liquor policy, and also directed a two-member government committee to submit its report Aug 26 on the condition of these bars.

"Now that the UDF has taken the policy decision, the state cabinet will meet and take an official decision and it would be conveyed to the court," UDF convenor P.P. Thankachen said.

Sudheeran said this was a "historic decision" that will be a boon for the people.

Finance Minister K.M. Mani said he was not worried of the over Rs.7,000 crore that will no longer come to the exchequer by way of taxes collected through sale of liquor every year.

"That's not an issue at all because we can find other ways," Mani said.